FRC ramps up enforcement activity

This year the Financial Report Council (“FRC”) published their first annual report on enforcement activities (available here) and the results are revealing. Some highlights for the year include:

• An increase of 177% in total financial sanctions to £42.9m (£15.5m in 2018);
• A 25% growth in the resourcing of the FRC enforcement division (signalling the level of future activity expected);
  
• 41 ongoing investigations as at July 2019; and
  
• 6 individuals excluded from membership of professional bodies.   
  

In addition the FRC have reviewed an average of 205 sets of financial statements in each of the last three years. The majority of these reviews have resulted in substantive correspondence with Audit Committees.  

This increasing level of scrutiny comes during a time of significant change in annual reporting: The new corporate governance codes from the FRC and Association of Investment Companies, alternative performance measure guidelines from the European Securities and Markets Authority and changes to International Financial Reporting Standards (specifically IFRS 9 Financial Assets, IFRS 15 Revenue and IFRS 16 Leases).   

KPMG in the Channel Islands seminar ACI seminar included speaker Tim Copnell, Head of the KPMG UK Audit Committee Institute, who discussed how Audit Committees should be managing this period of change.